IPO Preview: Globus Medical

Based in Audubon, PA, Globus Medical (NYSE:GMED) scheduled a $200 million IPO with a market capitalization of $1.55 billion at a price range mid-point of $17, for Thursday, April 2, 2012. Three other IPOs are scheduled for the week of July 30. Full IPO calendar available here.

SUMMARY GMED is a medical device company focused exclusively on the design, development and commercialization of products that promote healing in patients with spine disorders.

Strong financial performance Founded in 2003, GMED revenue for the March 2012 quarter was $95 million, up 22% from the year earlier quarter. Net income increased 23% to $18 million from $14 million

EBITDA was 36% for both quarters, and GMED generated $23 million in cash from operations for both quarters.

Understandable growth plan GMED believes it can continue to growth in the U.S. by adding more salespeople. Only 6% of 2011 revenue came from international sales, so GMED has barely scratched the surface internationally.

Strong product pipeline GMED expects to launch five to ten new products in each of the next three years.

Robust intellectual property As of April 30, 2012, GMED owned 98 issued U.S. patents and had applications pending for 247 U.S. patents.

SEGMENT COMPARISON

Segment competitors

Stock Price % Change YTD

Medtronic

7%

Stryker

-14%

Johnson & Johnson

7%

CONCLUSIONGMED is probably a longer term buy, considering that segment competitors have not performed well this year, and may not have much of an IPO pop. Seventy-five percent of the IPO is coming from selling shareholders.

BUSINESS GMED is a medical device company focused exclusively on the design, development and commercialization of products that promote healing in patients with spine disorders.

PRODUCTS GMED sells implants and related disposables to customers, primarily hospitals, for use by surgeons to treat spine disorders. All of its products fall into one of two categories: innovative fusion or disruptive technologies.

PRODUCT PIPELINE GMED is currently conducting clinical trials for several new disruptive technologies under FDA-approved investigational device exemptions, or IDEs, including the SECURE-C Cervical Artificial Disc, the ACADIA Facet Replacement System, and the TRIUMPH Lumbar Disc.

COMPETITION GMED believes its significant competitors are Medtronic, DePuy (a division of Johnson & Johnson), Synthes (which is being acquired by Johnson & Johnson), Stryker and NuVasive, which together represent a significant portion of the spine market.

GMED also competes with smaller spine participants such as Alphatec Spine, Orthofix International, and Zimmer.

EMPLOYEES As of March 31, 2012, GMED had 724 employees, 158 of whom were engaged in product development, 113 in general administrative and accounting activities and 277 in sales and marketing activities.

USE OF PROCEEDS Expects to net $35 million from the sale of 2.9 million shares. Shareholders intend to sell 8.8 million shares, or 75% of the offering.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: This GMED IPO report is based on a reading and analysis of [ticker]'s S-1 filing which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

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